Tackling low pay and encouraging the Living Wage

After spending years saying that there was no cost of living crisis, last week David Cameron said that Britain deserves a pay rise – a huge admission of failure. The recovery may have reached the City of London, but it hasn’t reached the kitchen tables of working people around the country. We are now approaching the end of the first Parliament since the 1920s in which people will be worse off at the end than they were at the beginning.

So here are some facts about pay under David Cameron: 

• Since the last election average wages have fallen by £1,600 a year with the number getting less than the Living Wage rising from 3.4 million to 4.9 million.
• Last year company directors’ rewards increased by 21%. A director in a FTSE 100 company now earns on average 130 times more than their average employee – and 300 times more than the Living Wage. 
• The Government has cut taxes for people earning £150,000 a year even while salaries at the top have been soaring away and ordinary workers’ wages have fallen. And if the Tories win the election, they want to cut taxes for millionaires even further.

The next Labour Government will raise the National Minimum Wage so that it gets closer to average earnings every year – rising to more than £8 before 2020.

But it is not just the legal minimum that matters. Labour believes government can do more to work with employers to pay the Living Wage. And firms that can afford to pay multi-million pound salaries at the top need to explain why they will not pay the Living Wage to those at the bottom.

Some 30 Labour local authorities are now paying the Living Wage to their staff. 

The next Labour Government will do more to encourage the Living Wage at the bottom and shed light on the pay packages given to some at the top.

We will: 

• Introduce Make Work Pay contracts, with a tax rebate for employers that sign up to become Living Wage employers in the first year of the next Parliament.
• Ensure that central government learns the lessons from local government in where firms seeking public sector contracts are required to pay the Living Wage.
• Require companies to publish the ratio of the pay of their top earner compared to the average employee and the pay packages of the 10 highest paid employees outside the boardroom.
• Put an employee representative on remuneration committees, ensuring the views of ordinary staff are heard when decisions to award top pay packages are made.

Tackling low pay and encouraging the Living Wage is one of the ways the next Labour Government can ensure everyone’s hard work is rewarded and we build real and enduring prosperity. 

Key messages

Labour has set out a new plan for Britain’s future, a plan that works for ordinary families, rewarding the hard work they do and saving the NHS they rely on.

The Tories can’t build a better future for working people because they stand up only for a privileged few. With the NHS going backwards and a recovery which works just for a few, working people can’t afford five more years of David Cameron.

You can’t trust Nick Clegg and the Liberal Democrats. They broke their promises and have been too weak to stand up to the Tories.

UKIP can’t stand for working people: they’re more Tory than the Tories, a party made up of Tory people, promoting Tory policies, bankrolled by Tory donors.

For additional briefing, please contact briefing@labour.org.uk